“If you want to be successful as a venture capitalist, you need to be ruthlessly open-minded, constantly re-examining your assumptions.”
VC investor Marc Andreessen made this statement, while addressing a seminar at the Stanford Graduate School Of Business. He started on a cheerful note stating, “If you have ever been to a venture capitalist’s office, they look a little bit like an insurance office. And it’s very depressing.”
Talking about the library at A16Z’s lobby office, accessible to all visitors, , Marc said that its sole purpose was to deliver a message:
“The great thing about the Valley, especially in our time, was the sense of newness and sense of future and the sense of audacity. There are new ideas, new people that can pursue things that have been never done before. So very future-oriented. That is an enormous strength. There is so much you can learn from past and you can literally spend your entire life reading.”
The library (Mark’s personal library which is placed on the lobby of the investment firm) mainly contains the history of Hollywood. Why does that fascinate Mark and what is the relation between the Valley and Hollywood? To this he replied, “Probably the biggest difference is in the Valley if you say that somebody’s startup is just all story, and no substance, it’s a very offensive thing to say. In Hollywood, they take this as a huge compliment…the whole point is to tell a great story.”
He further added, “Another big difference is… people in Valley thinks our lives are harder, it’s hard to start companies and it’s hard to compete for business. Hollywood is much more difficult…hardcore, competitive and even vicious environment.”
While he goes on and on with the similarities, one major thing he said they had in common is that tech and entertainment in itself are the two biggest industries in California and embody the spirit of California and the West. And, over time, both have excelled in their chosen fields – one with its technology and the other with its storytelling. “One of the things I found really amazing about the Valley is – it’s impossible to be in the Valley and not have the sense of what a great technology concept is. And that’s the same with Hollywood. They made everything from casablanca to Star Wars. It’s incredibly high-quality, high-achieving, high-calibre culture.”
VC Insights From Marc Andreessen
So, with all this history and learnings around, how does Marc, as a VC, actually go about figuring what exactly to focus upon? “We get 2,000 inbound pitches a year from qualified, referred entrepreneurs – somebody who has already hit the basics. So a lot of it is just about trying to meet all these founders… and survive the constant tsunami of new ideas, new thinking and new people… I try to complement that by trying to be proactive.”
To better explain, he cited the example of self-driving cars. “Self-driving cars are fundamental advance in computer technology, in transportation technology and obviously, they are gonna have a very big impact on the automotive industry. We then start by understanding its impact on cars 100 years ahead, on possible advancements and opportunities for self-driving cars.”
In life you may have to engage with people who disagree with you. So, what’s the broader lesson here for those in business school?
“Venture Capital is a funny business. In venture capital, there are two kinds of mistakes you can make. There’s a mistake of omission or there’s a mistake of commission. In the business of venture capital, every successful VC has made the mistake of omission and some really big ones. It turns out that the mistakes of commission, though important, are not scary. But the mistakes of omission payoff when those companies, become like if you lose you lose one x, but if you gain, it’s over 10,000 x.”
Next, he goes on to emphasise the importance of strategy, constraints in the organisation, difference in leadership styles that he experienced while running a company and during his stint as a VC. There’s a lot more Marc has to say in the video. Check it out and do let us know your views in the comments below!
Marc Lowell Andreessen is an American entrepreneur, investor, and software engineer. He is the coauthor of Mosaic, the first widely used Web browser; cofounder of Netscape and cofounder and general partner of Silicon Valley venture capital firm Andreessen Horowitz. He has an estimated net worth of $600 Mn. He sits on the Bboard of Ddirectors of Facebook, Hewlett Packard Enterprises, and eBay.